Caution is the keyword in personal finance. The world is full of temptation to lure you to spend and spend to get what you want in life. Can you discipline yourself to control your spending? Here are the vital points
1. Loan: The moment you are in debt you are in dangerous water. One wrong move you will enter into a crisis situation. The most important thing is to factor in the loan amount into your monthly budget. If your budget cannot accommodate the extra amount, do not go for the loan.
2. Loan shark: If you must borrow, keep the loan sharks at arm’s length. They will charge you an exorbitant interest rate and they will resort to unethical means to recover the loan plus interest from you when you are unable to meet their repayment schedule
3. Terms and conditions: Shop around for a loan, go for one which has the best terms and conditions in your favor.
4. Settle credit card bills promptly and fully every month: This is to avoid high-interest charges on the outstanding amount and late charges. When you opt for the minimum amount to pay you are building up debt to a point that is beyond your means to settle. It finally leads to bankruptcy. The other thing is to build a flawless credit record so that in the future when you do need a loan you can get better terms.
5. Emergency fund: It is prudent to keep three to six months of an emergency fund to meet the usual payments and expenses just in case you are out of work.
6. Spend wisely on needs but not wants: Curb the urge to buy what you want, learn to be happy with what you have. The less you spend the more money you will have for your retirement and the more likely for you to enjoy your financial freedom in your golden years.
7. Budget and follow the budget: The moment you spend more than what you have earned you are in debt. The worst thing is that getting into debt is easy but getting out of it is the most difficult thing to do. Spend less than your income is the only way to sleep soundly at night.
8. Avoid gambling: Don’t be greedy. There is no way to make money out of gambling or else gambling outlets will be out of business.
9. Distinguish between good debt and bad debt: You can borrow to further your education or when it is a solid investment like the purchase of a property in a prime location. Don’t do it when there is no return on the amount borrowed.
10. 开源节流（kai yuan jie liu）: This is a Chinese proverb. It literary means to open up more income streams and reduce outflows. It sums up the golden rule of personal financial management.
When you are debt-free you are the happiest person in the world.
Source: 10 Tips to Avoid Financial Crisis
1. Loan: The moment you are in debt you are in dangerous water. One wrong move you will enter into a crisis situation. The most important thing is to factor in the loan amount into your monthly budget. If your budget cannot accommodate the extra amount, do not go for the loan.
2. Loan shark: If you must borrow, keep the loan sharks at arm’s length. They will charge you an exorbitant interest rate and they will resort to unethical means to recover the loan plus interest from you when you are unable to meet their repayment schedule
3. Terms and conditions: Shop around for a loan, go for one which has the best terms and conditions in your favor.
4. Settle credit card bills promptly and fully every month: This is to avoid high-interest charges on the outstanding amount and late charges. When you opt for the minimum amount to pay you are building up debt to a point that is beyond your means to settle. It finally leads to bankruptcy. The other thing is to build a flawless credit record so that in the future when you do need a loan you can get better terms.
5. Emergency fund: It is prudent to keep three to six months of an emergency fund to meet the usual payments and expenses just in case you are out of work.
6. Spend wisely on needs but not wants: Curb the urge to buy what you want, learn to be happy with what you have. The less you spend the more money you will have for your retirement and the more likely for you to enjoy your financial freedom in your golden years.
7. Budget and follow the budget: The moment you spend more than what you have earned you are in debt. The worst thing is that getting into debt is easy but getting out of it is the most difficult thing to do. Spend less than your income is the only way to sleep soundly at night.
8. Avoid gambling: Don’t be greedy. There is no way to make money out of gambling or else gambling outlets will be out of business.
9. Distinguish between good debt and bad debt: You can borrow to further your education or when it is a solid investment like the purchase of a property in a prime location. Don’t do it when there is no return on the amount borrowed.
10. 开源节流（kai yuan jie liu）: This is a Chinese proverb. It literary means to open up more income streams and reduce outflows. It sums up the golden rule of personal financial management.
When you are debt-free you are the happiest person in the world.
Source: 10 Tips to Avoid Financial Crisis
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